Announces Formal Strategic Review of Topgolf
Including Organic and Inorganic Alternatives
HIGHLIGHTS
- Q2 Net Income of $62 million,
Non-GAAP Net Income of $83 million,
and Adjusted EBITDA of $206 million
were all ahead of expectations.
- Q2 Consolidated Revenues were down 1.9% year-over-year and full
year Revenue and Adjusted EBITDA outlook lowered to a range of
$4,200 - $4,260 million and $570 - $590
million, respectively.
- Maintained #1 U.S. model market share in Driver, Fairway Woods
and Irons with Ai Smoke clubs and
continued to drive market share gains in golf ball driven by the
new Chrome Tour family of golf balls.
- Successfully completed discretionary $50
million pay down of term loan debt.
- First half cash provided by operations improved by $173 million compared to prior year.
CARLSBAD, Calif., Aug. 7, 2024
/PRNewswire/ -- Topgolf Callaway Brands Corp. (the "Company" or
"Topgolf Callaway Brands", "we", "our", "us") (NYSE: MODG)
announced its financial results for the second quarter ended
June 30, 2024.
"Despite macro headwinds including the cumulative impact of
negative FX trends, persistently high inflation and recent
softer-than-expected traffic to our Topgolf venues, I am incredibly
proud of our team's ability to drive market share gains in our
products business as well as the continued strengthening of the
digital capabilities and fundamental venue profitability at
Topgolf," commented Chip Brewer,
President and Chief Executive Officer of Topgolf Callaway Brands.
"TravisMathew continues to gain market share and grow its highly
profitable direct to consumer business with 10 stores opening this
year. Jack Wolfskin successfully rightsized its
operations to focus on key markets in Central Europe and China. And our Golf Equipment results remain
strong, especially in the U.S. market, where our club market share
continues to lead the industry and our ball share continues to
grow. The successful rebranding and redesign of our premium Chrome
Tour family of balls highlights our excellence in R&D and
commitment to innovation.
Mr. Brewer continued "As we look forward, we remain convinced
that Topgolf is a high-quality business with significant future
opportunity. It is transforming the game of golf, and we
believe it will deliver substantial growth and financial returns
over time. At the same time, we have been disappointed in our
stock performance for some time, as well as the more recent same
venue sales performance. As a result, we are in the process
of conducting a full strategic review of Topgolf. This review
includes the assessment of organic strategies to return Topgolf to
profitable same venue sales growth, as well as inorganic
alternatives, including a potential spin of Topgolf. Our
strategic review of Topgolf is being conducted with the help of
outside advisors and is focused on maximizing long-term shareholder
value. We are active in this work at present and expect to complete
our strategic review of Topgolf expeditiously. We will report
back on this when the work is complete."
CONSOLIDATED RESULTS
The Company announced the following GAAP and non-GAAP financial
results for the three and six months ended June 30, 2024 and 2023:
|
GAAP
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except
percentages and per share data)
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
$
Change
|
|
%
Change
|
|
2024
|
|
2023
|
|
$
Change
|
|
%
Change
|
|
Net revenues
|
$
1,157.8
|
|
$
1,179.7
|
|
$
(21.9)
|
|
(1.9) %
|
|
$
2,302.0
|
|
$
2,347.1
|
|
$ (45.1)
|
|
(1.9) %
|
|
Income from
operations
|
103.0
|
|
116.0
|
|
(13.0)
|
|
(11.2) %
|
|
169.9
|
|
196.5
|
|
(26.6)
|
|
(13.5) %
|
|
Other expense,
net
|
(50.6)
|
|
(44.4)
|
|
(6.2)
|
|
14.0 %
|
|
(106.0)
|
|
(104.1)
|
|
(1.9)
|
|
1.8 %
|
|
Income before
taxes
|
52.4
|
|
71.6
|
|
(19.2)
|
|
(26.8) %
|
|
63.9
|
|
92.4
|
|
(28.5)
|
|
(30.8) %
|
|
Income tax
benefit
|
(9.7)
|
|
(45.8)
|
|
36.1
|
|
(78.8) %
|
|
(4.7)
|
|
(50.0)
|
|
45.3
|
|
(90.6) %
|
|
Net income
|
$ 62.1
|
|
$ 117.4
|
|
$
(55.3)
|
|
(47.1) %
|
|
$ 68.6
|
|
$ 142.4
|
|
$ (73.8)
|
|
(51.8) %
|
|
Earnings per share -
diluted
|
$ 0.32
|
|
$ 0.59
|
|
$
(0.27)
|
|
(45.8) %
|
|
$ 0.36
|
|
$ 0.72
|
|
$ (0.36)
|
|
(50.0) %
|
|
Weighted-average common
shares outstanding - diluted
|
199.6
|
|
201.3
|
|
(1.7)
|
|
(0.8) %
|
|
199.4
|
|
201.4
|
|
(2.0)
|
|
(1.0) %
|
NON-GAAP RESULTS
Non-GAAP results exclude certain non-cash and non-recurring
adjustments as defined in the Additional Information and
Disclosures section of this release. The Company has also provided
a reconciliation of the non-GAAP information to the most directly
comparable GAAP information in the tables to this release.
|
(in millions, except
percentages and per share data)
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
$ Change
|
|
% Change
|
|
Constant
Currency
vs.
2023(1)
|
|
2024
|
|
2023
|
|
$ Change
|
|
% Change
|
|
Constant
Currency
vs.
2023(1)
|
|
Net revenues
|
$
1,157.8
|
|
$
1,179.7
|
|
$
(21.9)
|
|
(1.9) %
|
|
(0.9) %
|
|
$
2,302.0
|
|
$
2,347.1
|
|
$
(45.1)
|
|
(1.9) %
|
|
(1.1) %
|
|
Non-GAAP Income from
operations
|
$
121.8
|
|
$
127.7
|
|
$
(5.9)
|
|
(4.6) %
|
|
0.2 %
|
|
$
194.4
|
|
$
215.7
|
|
$
(21.3)
|
|
(9.9) %
|
|
(4.8) %
|
|
Non-GAAP Net
income
|
$
83.1
|
|
$
75.6
|
|
$
7.5
|
|
9.9 %
|
|
|
|
$
97.5
|
|
$
106.0
|
|
$
(8.5)
|
|
(8.0) %
|
|
|
|
Non-GAAP Earnings per
share - diluted
|
$
0.42
|
|
$
0.38
|
|
$
0.04
|
|
11.8 %
|
|
|
|
$
0.51
|
|
$
0.54
|
|
$
(0.03)
|
|
(5.6) %
|
|
|
|
Non-GAAP Adjusted
EBITDA
|
$
205.6
|
|
$
206.2
|
|
$
(0.6)
|
|
(0.3) %
|
|
|
|
$
366.5
|
|
$
363.5
|
|
$
3.0
|
|
0.8 %
|
|
|
|
|
(1) See
"Additional Information and Disclosures—Non-GAAP Information" for
the calculation methodology of constant currency
measures.
|
SECOND QUARTER 2024 CONSOLIDATED RESULTS COMMENTARY
(All comparisons to prior periods are calculated on a
year-over-year basis, unless otherwise noted)
The Company's net revenue of $1,157.8
million decreased 1.9% year-over-year, due to an 8.2%
decrease in Golf Equipment as a result of a planned shift in
equipment launch timing compared to last year. Active Lifestyle
revenue decreased 3.2% primarily due to expected lower sales at
Jack Wolfskin. Topgolf segment revenues increased 5.0%
year-over-year driven by revenue from additional venues.
Income from operations decreased $13.0 million on a GAAP basis and
$5.9 million on a non-GAAP basis
primarily due to unfavorable changes in foreign currency.
Net income decreased $55.3 million on a GAAP basis and increased
$7.5 million on a non-GAAP basis
compared to the same period in the prior year. The decrease in net
income on a GAAP basis was primarily attributable to a decrease in
income tax benefit, the decrease in operating income previously
mentioned, and higher interest expense related to new venues. On a
non-GAAP basis, the increase in net income was due to a decline in
income tax expense as well as lower interest expense as a result of
our debt refinancing.
Adjusted EBITDA of $205.6 million was approximately flat
(-0.3%) vs. the prior year, exceeding the high-end of our Q2 2024
guidance range, driven by reduced costs and strong operational
efficiencies.
SEGMENT RESULTS
SEGMENT NET REVENUES
The table below provides net revenues by segment for the periods
presented:
|
|
|
|
|
|
|
|
|
(in millions, except
percentages)
|
Three Months Ended
June 30,
|
|
Constant
Currency
vs. 2023(1)
|
|
Six Months Ended
June 30,
|
|
Constant
Currency
vs. 2023(1)
|
|
2024
|
|
2023
|
|
%
Change
|
|
%
Change
|
|
2024
|
|
2023
|
|
%
Change
|
|
%
Change
|
|
Topgolf
|
$
494.4
|
|
$
470.8
|
|
5.0 %
|
|
5.0 %
|
|
$
917.2
|
|
$
874.3
|
|
4.9 %
|
|
4.8 %
|
|
Golf
Equipment
|
413.8
|
|
451.0
|
|
(8.2) %
|
|
(6.7) %
|
|
863.7
|
|
894.7
|
|
(3.5) %
|
|
(2.0) %
|
|
Active
Lifestyle
|
249.6
|
|
257.9
|
|
(3.2) %
|
|
(1.7) %
|
|
521.1
|
|
578.1
|
|
(9.9) %
|
|
(8.7) %
|
|
Net Revenues
|
$
1,157.8
|
|
$
1,179.7
|
|
(1.9) %
|
|
(0.9) %
|
|
$
2,302.0
|
|
$
2,347.1
|
|
(1.9) %
|
|
(1.1) %
|
|
|
(1) See
"Additional Information and Disclosures—Non-GAAP Information" for
the calculation methodology of constant currency
measures.
|
SEGMENT OPERATING INCOME
The table below provides the breakout of segment operating
income for the periods presented:
|
|
|
|
|
(in millions, except
percentages)
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
Change
|
|
2024
|
|
2023
|
|
Change
|
|
Topgolf
|
$ 56.1
|
|
$ 44.0
|
|
27.5 %
|
|
$ 59.0
|
|
$ 46.8
|
|
26.1 %
|
|
% of segment
revenue
|
11.3 %
|
|
9.3 %
|
|
200
bps
|
|
6.4 %
|
|
5.4 %
|
|
100
bps
|
|
Golf
Equipment
|
77.4
|
|
96.4
|
|
(19.7) %
|
|
159.5
|
|
178.0
|
|
(10.4) %
|
|
% of segment
revenue
|
18.7 %
|
|
21.4 %
|
|
(270) bps
|
|
18.5 %
|
|
19.9 %
|
|
(140) bps
|
|
Active
Lifestyle
|
14.7
|
|
19.5
|
|
(24.6) %
|
|
39.4
|
|
56.8
|
|
(30.6) %
|
|
% of segment
revenue
|
5.9 %
|
|
7.6 %
|
|
(170) bps
|
|
7.6 %
|
|
9.8 %
|
|
(220) bps
|
|
Total Segment Operating
Income
|
$ 148.2
|
|
$ 159.9
|
|
(7.3) %
|
|
$ 257.9
|
|
$ 281.6
|
|
(8.4) %
|
|
% of total segment
revenue
|
12.8 %
|
|
13.6 %
|
|
(80)
bps
|
|
11.2 %
|
|
12.0 %
|
|
(80)
bps
|
|
Constant
Currency
Total Segment Operating
Income
|
|
|
|
|
(3.5) %
|
|
|
|
|
|
(4.5) %
|
SECOND QUARTER 2024 SEGMENT COMMENTARY
(All comparisons to prior periods are calculated on a
year-over-year basis, unless otherwise noted)
Topgolf
- Segment revenue increased $23.6
million or 5.0%, to $494.4
million, driven primarily by new venues.
- Same venue sales of -8% were below expectations driven by
softer-than-expected traffic as the business navigates the current
cyclical macro challenges.
- Segment operating income increased $12.1
million, or 27.5%, to $56.1
million and Segment Adjusted EBITDA increased $17.4 million, or 18.9%, to $109.5 million primarily due to increased
revenue from new venues and strong operating efficiencies.
Golf Equipment
- Segment revenue decreased $37.2 million or 8.2% to $413.8 million, in line with expectations.
The decline was primarily due to the lapping effect of last year's
Big Bertha woods and irons launch, as well as changes in foreign
exchange rates.
- Segment operating income decreased $19.0
million, primarily due to lower revenue, higher air freight
costs and changes in foreign exchange rates, partially offset by
management of operating expenses.
Active Lifestyle
- Segment revenue decreased $8.3 million or 3.2% to $249.6 million resulting primarily from
previously expected lower wholesale revenue at Jack Wolfskin.
- Segment operating income decreased $4.8 million due to the decrease in revenue
previously mentioned.
The following is a reconciliation of total segment operating
income to income before income taxes for the periods presented:
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
(in
millions)
|
2024
|
|
2023
|
|
$
Change
|
|
2024
|
|
2023
|
|
$
Change
|
|
Total segment operating
income:
|
$
148.2
|
|
$
159.9
|
|
$
(11.7)
|
|
$
257.9
|
|
$
281.6
|
|
$
(23.7)
|
|
Reconciling
items(1)
|
(45.2)
|
|
(43.9)
|
|
(1.3)
|
|
(88.0)
|
|
(85.1)
|
|
(2.9)
|
|
Income from
operations
|
103.0
|
|
116.0
|
|
(13.0)
|
|
169.9
|
|
196.5
|
|
(26.6)
|
|
Interest expense,
net
|
(57.0)
|
|
(51.7)
|
|
(5.3)
|
|
(115.8)
|
|
(101.3)
|
|
(14.5)
|
|
Other income
(expense), net
|
6.4
|
|
7.3
|
|
(0.9)
|
|
9.8
|
|
(2.8)
|
|
12.6
|
|
Income before income
taxes
|
$
52.4
|
|
$
71.6
|
|
$
(19.2)
|
|
$
63.9
|
|
$
92.4
|
|
$
(28.5)
|
|
|
(1) Includes
corporate overhead and certain non-recurring and non-cash items as
described in the schedules to this release.
|
2024 BALANCE SHEET HIGHLIGHTS
- Inventory decreased $192.7
million year-over-year to $647.1
million, across all three segments.
- The Company made a $50
million discretionary payment against the outstanding
principal of its term loan debt at the end of May.
- Available liquidity, which is comprised of cash on hand plus
availability under the Company's credit facilities, increased
$136 million compared to June 30, 2023.
BUSINESS OUTLOOK
|
2024 FULL YEAR
OUTLOOK
|
|
(in millions, except
where noted otherwise and for percentages and per share
data)
|
|
|
|
|
|
2024
Current
Estimate(1)
|
2024
Previous
Estimate
|
2023
As
Reported(1)
|
|
Consolidated Net
Revenues
|
$4,200 -
$4,260
|
$4,435 -
$4,475
|
$4,285
|
|
Topgolf
Revenue
|
Approx.
$1,790
|
Approx.
$1,960
|
$1,761
|
|
Topgolf Same Venue
Sales Growth
|
Down very high
single
digits to low double digits
|
Slightly positive to
down
low single digits
|
1 %
|
|
Consolidated Adjusted
EBITDA(2)
|
$570 - $590
|
$620 - $640
|
$597
|
|
Topgolf Adjusted
EBITDA(2)
|
Approx. $310
|
Approx. $350
|
$304
|
|
Non-GAAP Diluted
Earnings per Share(2)
|
$0.11 -
$0.21
|
$0.31 -
$0.39
|
$0.45
|
|
Diluted Shares
Outstanding
|
Approx. 185
|
Approx. 200
|
201
|
|
|
(1) 2024
includes an estimated $35 million unfavorable year-over-year
foreign currency translation impact on revenue
|
|
(2) Non-GAAP
measure. See "Additional Information and Disclosures—Non-GAAP
Information" for more information and the schedules to this press
release for reconciliations to the most directly comparable GAAP
measure.
|
|
2024 THIRD QUARTER
OUTLOOK
|
|
(in
millions)
|
|
|
|
|
Q3
2024
Estimate(1)
|
|
Q3
2023
As
Reported(1)
|
|
Consolidated Net
Revenues
|
$970 - $990
|
|
$1,041
|
|
Consolidated Adjusted
EBITDA
|
$95 - $105
|
|
$163
|
|
|
(1) 2024
estimates include approximately $10 million of unfavorable foreign
currency impact on revenue.
|
ADDITIONAL INFORMATION AND DISCLOSURES
Conference Call and Webcast
The Company will be holding a conference call at 2:00 p.m. Pacific time today, August 7, 2024, to discuss the Company's
financial results, outlook and business. The call will be webcast
live on our investor relations website at
https://www.topgolfcallawaybrands.com/news-and-events/presentations.
A replay of the conference call will be available approximately two
hours after the call ends. The replay may be accessed through the
Investor Relations section of the Company's website at
https://www.topgolfcallawaybrands.com.
Non-GAAP Information
The GAAP results contained in this press release and the
financial statement schedules attached to this press release have
been prepared in accordance with accounting principles generally
accepted in the United States of
America ("GAAP"). To supplement the GAAP results, the
Company has provided certain non-GAAP financial information as
follows:
Constant Currency Basis. The Company provided
certain information regarding the Company's financial results or
projected financial results on a "constant currency basis" or as
"constant currency" results. This information estimates the impact
of changes in foreign currency exchange rates on the translation of
the Company's current or projected future period financial results
as compared to the applicable comparable period. This impact is
derived by taking the current or projected local currency results
and translating them into U.S. dollars based upon the foreign
currency exchange rates for the applicable comparable period. It
does not include any other effect of changes in foreign currency
rates on the Company's results or business.
Non-Recurring and Non-cash Adjustments. The Company
provided information excluding certain non-cash amortization of
acquired intangible assets, including customer and distributor
relationships, reacquired distribution rights and acquired
developed technology related to the Company's merger with Topgolf,
acquisitions of Jack Wolfskin, TravisMathew and OGIO, and
reacquisition of distribution rights in the Korea apparel market.
While the amortization of acquired intangible assets is excluded
from the calculation of non-GAAP net income, the revenue and
operating costs associated with these acquired companies is
reflected in non-GAAP net income calculations, as well as the
acquired assets that contribute to revenue generation. For 2024,
non-recurring items include charges related to restructuring and
reorganization in the Active Lifestyle segment, currency
translation adjustments for the dissolution of a foreign
subsidiary, the 2024 debt repricing, a 2023 cybersecurity incident,
impairment and abandonment of the Shankstars media game, and IT
integration and implementation costs stemming primarily from the
merger with Topgolf. For 2023, non-recurring items include legal
costs, credit agency fees, and losses associated with our 2023 debt
modification, combined with IT integration and implementation costs
stemming primarily from the merger with Topgolf, charges related to
the impairment and abandonment of the Shankstars media game, and
restructuring and reorganization charges in our Topgolf and Active
Lifestyle segments.
Adjusted EBITDA. The Company provides information about
its results excluding interest, taxes, depreciation and
amortization expenses, stock compensation expense, non-cash lease
amortization expense, and the non-recurring and non-cash items
referenced above.
Adjusted Free Cash Flow. The Company defines Adjusted
Free Cash Flow as cash flows from operating activities, less
capital expenditures net of proceeds from lease financing and net
of proceeds from government grants.
In addition, the Company has included in the schedules attached
to this release a reconciliation of certain non-GAAP information to
the most directly comparable GAAP information. The non-GAAP
information presented in this release and related schedules should
not be considered in isolation or as a substitute for any measure
derived in accordance with GAAP. The non-GAAP information may also
be inconsistent with the manner in which similar measures are
derived or used by other companies. Management uses such non-GAAP
information for financial and operational decision-making purposes
and as a means to evaluate period-over-period comparisons and in
forecasting the Company's business going forward. Management
believes that the presentation of such non-GAAP information, when
considered in conjunction with the most directly comparable GAAP
information, provides additional useful comparative information for
investors in their assessment of the underlying performance, and,
in some cases, financial condition, of the Company's business with
regard to these items.
For forward-looking Adjusted EBITDA, non-GAAP diluted earnings
per share, and Topgolf Adjusted EBITDA (together, the "Projected
Non-GAAP Measures") information provided in this release,
reconciliation of such Projected Non-GAAP Measures to the most
closely comparable GAAP financial measures are not provided because
the Company is unable to provide such reconciliation without
unreasonable efforts. The inability to provide a reconciliation is
because the Company is currently unable to predict with a
reasonable degree of certainty the type and extent of certain items
that would be expected to impact net income in the future but would
not impact the Projected Non-GAAP measures. These items may include
certain non-cash depreciation, which will fluctuate based on the
Company's level of capital expenditures, non-cash amortization of
intangibles related to the Company's acquisitions, income taxes,
which can fluctuate based on changes in the other items noted
and/or future forecasts, and other non-recurring costs and non-cash
adjustments. Historically, the Company has excluded these items
from the Projected Non-GAAP Measures. The Company currently expects
to continue to exclude these items in future disclosures of the
Projected Non-GAAP Measures and may also exclude other items that
may arise. The events that typically lead to the recognition of
such adjustments are inherently unpredictable as to if or when they
may occur, and therefore actual results may differ materially. This
unavailable information could have a significant impact on GAAP
financial measures.
Definitions
Same venue sales. The Company defines same venue sales
for its Topgolf business as sales for the comparable venue base,
which is defined as the number of Company-operated venues with at
least 24 full fiscal months of operations in the year of
comparison.
Forward-Looking Statements
Statements used in this press release that relate to future
plans, events, financial results, performance, prospects, or growth
opportunities, including statements relating to the Company's (and
its segments') third quarter and full year 2024 guidance (including
net revenues, Topgolf revenues, Adjusted EBITDA, Topgolf Adjusted
EBITDA, non-GAAP diluted earnings per share, same venue sales
growth, cash generation and diluted shares outstanding), strength
and demand of the Company's products and services, continued brand
momentum, demand for golf and outdoor activities and apparel,
continued investments in the business, consumer trends and
behavior, future industry and market conditions, foreign currency
effects and their impacts, tax rates, the completion of any
strategic transaction, and statements of belief and any statement
of assumptions underlying any of the foregoing, are forward-looking
statements as defined under the Private Securities Litigation
Reform Act of 1995. The words "believe," "expect," "estimate,"
"could," "would," "should," "intend," "may," "plan," "seek,"
"anticipate," "project" and similar expressions, among others,
generally identify forward-looking statements, which speak only as
of the date the statements were made and are not guarantees of
future performance. These statements are based upon current
information and expectations. Accurately estimating the
forward-looking statements is based upon various risks and
unknowns, including uncertainty regarding global economic
conditions, including relating to inflation, decreases in consumer
demand and spending, and any severe or prolonged economic downturn;
costs, expenses or difficulties related to the merger with Topgolf,
including the integration of the Topgolf business; failure to
realize the expected benefits and synergies of the Topgolf merger
in the expected timeframes or at all; the Company's level of
indebtedness; continued availability of credit facilities and
liquidity and ability to comply with applicable debt covenants;
effectiveness of capital allocation and cost/expense reduction
efforts; continued brand momentum and product success; growth in
the direct-to-consumer and e-commerce channels; ability to realize
the benefits of the continued investments in the Company's
business; consumer acceptance of and demand for the Company's and
its subsidiaries' products and services; any changes in U.S. trade,
tax or other policies, including restrictions on imports or an
increase in import tariffs; future retailer purchasing activity,
which can be significantly negatively affected by adverse industry
conditions and overall retail inventory levels; the level of
promotional activity in the marketplace; and future changes in
foreign currency exchange rates and the degree of effectiveness of
the Company's hedging programs. Actual results may differ
materially from those estimated or anticipated as a result of these
risks and unknowns or other risks and uncertainties, including the
effect of terrorist activity, armed conflict, natural disasters or
pandemic diseases on the economy generally, on the level of demand
for the Company's and its subsidiaries' products and services or on
the Company's ability to manage its operations, supply chain and
delivery logistics in such an environment; delays, difficulties or
increased costs in the supply of components or commodities needed
to manufacture the Company's products or in manufacturing the
Company's products; and a decrease in participation levels in golf
generally. For additional information concerning these and other
risks and uncertainties that could affect these statements and the
Company's business, see the Company's Annual Report on Form 10-K
for the year ended December 31, 2023
as well as other risks and uncertainties detailed from time to time
in the Company's reports on Forms 10-K, 10-Q and 8-K subsequently
filed with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company
undertakes no obligation to republish revised forward-looking
statements to reflect events or circumstances after the date hereof
or to reflect the occurrence of unanticipated events.
About Topgolf Callaway Brands
Topgolf Callaway Brands Corp. (NYSE: MODG) is an unrivaled
tech-enabled Modern Golf and active lifestyle company delivering
leading golf equipment, apparel, and entertainment, with a
portfolio of global brands including Topgolf, Callaway Golf,
TravisMathew, Toptracer, Odyssey, OGIO, Jack Wolfskin, and World
Golf Tour ("WGT"). "Modern Golf" is the dynamic and inclusive
ecosystem that includes both on-course and off-course golf. For
more information, please visit
https://www.topgolfcallawaybrands.com.
Investor Contact
Katina
Metzidakis
invrelations@tcbrands.com
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(In
millions)
|
|
(Unaudited)
|
|
|
June 30,
2024
|
|
December 31,
2023
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
311.8
|
|
$
393.5
|
|
Restricted
cash
|
0.7
|
|
0.8
|
|
Accounts receivable,
net
|
390.4
|
|
200.5
|
|
Inventories
|
647.1
|
|
794.4
|
|
Other current
assets
|
263.1
|
|
238.9
|
|
Total current
assets
|
1,613.1
|
|
1,628.1
|
|
Property, plant and
equipment, net
|
2,185.0
|
|
2,156.5
|
|
Operating lease
right-of-use assets, net
|
1,380.1
|
|
1,410.1
|
|
Goodwill and intangible
assets, net
|
3,490.1
|
|
3,494.2
|
|
Other assets,
net
|
432.1
|
|
431.7
|
|
Total
assets
|
$
9,100.4
|
|
$
9,120.6
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued expenses
|
$
437.8
|
|
$
480.5
|
|
Accrued employee
compensation and benefits
|
114.7
|
|
113.1
|
|
Asset-based credit
facilities
|
45.1
|
|
54.7
|
|
Operating lease
liabilities, short-term
|
87.3
|
|
86.4
|
|
Construction
advances
|
15.6
|
|
59.3
|
|
Deferred
revenue
|
97.4
|
|
110.9
|
|
Other current
liabilities
|
39.3
|
|
42.7
|
|
Total current
liabilities
|
837.2
|
|
947.6
|
|
Long-term debt,
net
|
1,464.5
|
|
1,518.2
|
|
Operating lease
liabilities, long-term
|
1,414.4
|
|
1,433.4
|
|
Deemed landlord
financing obligations
|
1,095.7
|
|
980.0
|
|
Deferred taxes,
net
|
31.3
|
|
36.7
|
|
Other long-term
liabilities
|
323.8
|
|
326.5
|
|
Total shareholders'
equity
|
3,933.5
|
|
3,878.2
|
|
Total liabilities and
shareholders' equity
|
$
9,100.4
|
|
$
9,120.6
|
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In millions, except
per share data)
|
|
(Unaudited)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
Products
|
$
668.5
|
|
$
713.5
|
|
$
1,394.6
|
|
$
1,481.1
|
|
Services
|
489.3
|
|
466.2
|
|
907.4
|
|
866.0
|
|
Total net
revenues
|
1,157.8
|
|
1,179.7
|
|
2,302.0
|
|
2,347.1
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of
products
|
375.4
|
|
387.9
|
|
788.3
|
|
829.9
|
|
Cost of services,
excluding depreciation and amortization
|
50.7
|
|
51.4
|
|
92.3
|
|
95.8
|
|
Other venue
expense
|
339.4
|
|
317.1
|
|
662.8
|
|
622.6
|
|
Selling, general and
administrative expense
|
259.5
|
|
279.6
|
|
532.5
|
|
548.1
|
|
Research and
development expense
|
27.0
|
|
22.0
|
|
50.2
|
|
44.8
|
|
Venue pre-opening
costs
|
2.8
|
|
5.7
|
|
6.0
|
|
9.4
|
|
Total costs and
expenses
|
1,054.8
|
|
1,063.7
|
|
2,132.1
|
|
2,150.6
|
|
Income from
operations
|
103.0
|
|
116.0
|
|
169.9
|
|
196.5
|
|
Interest expense,
net
|
(57.0)
|
|
(51.7)
|
|
(115.8)
|
|
(101.3)
|
|
Other income (expense),
net
|
6.4
|
|
7.3
|
|
9.8
|
|
(2.8)
|
|
Income before
taxes
|
52.4
|
|
71.6
|
|
63.9
|
|
92.4
|
|
Income tax
benefit
|
(9.7)
|
|
(45.8)
|
|
(4.7)
|
|
(50.0)
|
|
Net income
|
$
62.1
|
|
$
117.4
|
|
$
68.6
|
|
$
142.4
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
0.34
|
|
$
0.63
|
|
$
0.37
|
|
$
0.77
|
|
Diluted
|
$
0.32
|
|
$
0.59
|
|
$
0.36
|
|
$
0.72
|
|
Weighted-average common
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
183.5
|
|
185.2
|
|
183.6
|
|
185.2
|
|
Diluted
|
199.6
|
|
201.3
|
|
199.4
|
|
201.4
|
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
|
|
(In
millions)
|
|
(Unaudited)
|
|
|
Six Months
Ended
June
30,
|
|
2024
|
|
2023
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
$
68.6
|
|
$
142.4
|
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
Depreciation and amortization
|
131.2
|
|
114.7
|
|
Non-cash
interest on financing and deemed landlord financed
leases
|
18.4
|
|
13.6
|
|
Loss on disposal of
long-lived assets and other
|
4.9
|
|
—
|
|
Amortization of debt discount and issuance costs
|
2.9
|
|
3.4
|
|
Impairment
loss
|
6.3
|
|
—
|
|
Deferred
taxes, net
|
(4.9)
|
|
(47.2)
|
|
Share-based
compensation
|
20.1
|
|
24.8
|
|
Unrealized net losses
on hedging instruments and foreign currency
|
2.2
|
|
3.5
|
|
Loss on
debt modification
|
4.7
|
|
10.5
|
|
Other
|
1.2
|
|
1.1
|
|
Changes in assets and
liabilities, net of impacts from business combinations
|
(104.2)
|
|
(288.6)
|
|
Net cash provided by
(used in) operating activities
|
151.4
|
|
(21.8)
|
|
|
|
|
|
Cash flows from
investing activities, net of impacts of business
combinations:
|
|
|
|
|
Capital
expenditures
|
(149.3)
|
|
(262.6)
|
|
Asset acquisitions,
net of cash acquired
|
—
|
|
(18.7)
|
|
Business combinations,
net of cash acquired
|
(23.3)
|
|
—
|
|
Proceeds from
government grants
|
—
|
|
3.0
|
|
Investment in
golf-related ventures
|
(0.3)
|
|
(2.1)
|
|
Acquisition of
intangible assets
|
(1.3)
|
|
(0.7)
|
|
Proceeds from sale of
property and equipment
|
0.2
|
|
0.4
|
|
Net cash used in
investing activities
|
(174.0)
|
|
(280.7)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Repayments of
long-term debt and DLF obligations
|
(68.1)
|
|
(782.0)
|
|
Proceeds from
borrowings on long-term debt
|
—
|
|
1,224.8
|
|
Repayments of credit
facilities, net
|
(5.4)
|
|
(229.8)
|
|
Debt issuance
costs
|
(0.2)
|
|
(1.3)
|
|
Repayments of
financing leases
|
(1.9)
|
|
(1.7)
|
|
Proceeds from lease
financing
|
54.6
|
|
111.3
|
|
Exercise of stock
options
|
—
|
|
3.7
|
|
Acquisition of
treasury stock
|
(31.3)
|
|
(27.3)
|
|
Net cash (used in)
provided by financing activities
|
(52.3)
|
|
297.7
|
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
(6.8)
|
|
(2.1)
|
|
Net decrease in cash,
cash equivalents and restricted cash
|
(81.7)
|
|
(6.9)
|
|
Cash, cash equivalents
and restricted cash at beginning of period
|
398.8
|
|
203.4
|
|
Cash, cash equivalents
and restricted cash at end of period
|
317.1
|
|
196.5
|
|
Less: restricted
cash(1)
|
(5.3)
|
|
(4.7)
|
|
Cash and cash
equivalents at end of period
|
$
311.8
|
|
$
191.8
|
|
|
(1) Includes
$0.7 million and $0.5 million of short-term restricted cash and
$4.6 million and $4.2 million of long-term restricted
cash included in other assets for the periods ended June 30, 2024
and 2023, respectively.
|
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
CONSOLIDATED NET
REVENUES AND OPERATING SEGMENT INFORMATION
|
|
(In
millions)
|
|
(Unaudited)
|
|
|
Net Revenues by
Category
|
|
Three Months
Ended
June
30,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs.
2023(1)
|
|
2024
|
|
2023
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Venues
|
$
473.7
|
|
$
453.2
|
|
$
20.5
|
|
4.5 %
|
|
4.5 %
|
|
Topgolf other business
lines
|
20.7
|
|
17.6
|
|
3.1
|
|
17.6 %
|
|
17.6 %
|
|
Golf Clubs
|
310.2
|
|
340.3
|
|
(30.1)
|
|
(8.8 %)
|
|
(7.0 %)
|
|
Golf Balls
|
103.6
|
|
110.7
|
|
(7.1)
|
|
(6.4 %)
|
|
(5.8 %)
|
|
Apparel
|
145.0
|
|
143.5
|
|
1.5
|
|
1.0 %
|
|
2.9 %
|
|
Gear, Accessories
& Other
|
104.6
|
|
114.4
|
|
(9.8)
|
|
(8.6 %)
|
|
(7.4 %)
|
|
Total net
revenues
|
$
1,157.8
|
|
$
1,179.7
|
|
$
(21.9)
|
|
(1.9 %)
|
|
(0.9 %)
|
|
|
|
|
|
|
|
|
|
|
|
(1) See
"Additional Information and Disclosures—Non-GAAP Information" for
the calculation methodology of constant currency
measures.
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues by
Region
|
|
Three Months
Ended
June
30,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs. 2023(1)
|
|
2024
|
|
2023
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
891.3
|
|
$
886.7
|
|
$
4.6
|
|
0.5 %
|
|
0.5 %
|
|
Europe
|
114.1
|
|
120.2
|
|
(6.1)
|
|
(5.1 %)
|
|
(4.7 %)
|
|
Asia
|
109.1
|
|
128.2
|
|
(19.1)
|
|
(14.9 %)
|
|
(7.3 %)
|
|
Rest of
world
|
43.3
|
|
44.6
|
|
(1.3)
|
|
(2.9 %)
|
|
(1.3 %)
|
|
Total net
revenues
|
$
1,157.8
|
|
$
1,179.7
|
|
$
(21.9)
|
|
(1.9 %)
|
|
(0.9 %)
|
|
|
|
|
|
|
|
|
|
|
|
(1) See
"Additional Information and Disclosures—Non-GAAP Information" for
the calculation methodology of constant currency
measures.
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
Three Months
Ended
June
30,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs. 2023(1)
|
|
2024
|
|
2023
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
494.4
|
|
$
470.8
|
|
$
23.6
|
|
5.0 %
|
|
5.0 %
|
|
Golf
Equipment
|
413.8
|
|
451.0
|
|
(37.2)
|
|
(8.2 %)
|
|
(6.7 %)
|
|
Active
Lifestyle
|
249.6
|
|
257.9
|
|
(8.3)
|
|
(3.2 %)
|
|
(1.7 %)
|
|
Total net
revenues
|
$
1,157.8
|
|
$
1,179.7
|
|
$
(21.9)
|
|
(1.9 %)
|
|
(0.9 %)
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
56.1
|
|
$
44.0
|
|
$
12.1
|
|
27.5 %
|
|
|
|
Golf
Equipment
|
77.4
|
|
96.4
|
|
(19.0)
|
|
(19.7 %)
|
|
|
|
Active
Lifestyle
|
14.7
|
|
19.5
|
|
(4.8)
|
|
(24.6 %)
|
|
|
|
Total segment operating
income
|
148.2
|
|
159.9
|
|
(11.7)
|
|
(7.3 %)
|
|
|
|
Corporate G&A and
other(2)
|
(45.2)
|
|
(43.9)
|
|
(1.3)
|
|
3.0 %
|
|
|
|
Total operating
income
|
103.0
|
|
116.0
|
|
(13.0)
|
|
(11.2 %)
|
|
|
|
Interest expense,
net
|
(57.0)
|
|
(51.7)
|
|
(5.3)
|
|
10.3 %
|
|
|
|
Other income,
net
|
6.4
|
|
7.3
|
|
(0.9)
|
|
(12.3 %)
|
|
|
|
Total income before
income taxes
|
$
52.4
|
|
$
71.6
|
|
$
(19.2)
|
|
(26.8 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See
"Additional Information and Disclosures—Non-GAAP Information" for
the calculation methodology of constant currency
measures.
|
|
(2) Amount
includes corporate general and administrative expenses not utilized
by management in determining segment profitability, in addition to
certain non-cash and non-recurring items described in the
Supplemental Financial Information and Non-GAAP Reconciliation
table below.
|
|
TOPGOLF CALLAWAY
BRANDS CORP.
|
|
CONSOLIDATED NET
REVENUES AND OPERATING SEGMENT INFORMATION
|
|
(In
millions)
|
|
(Unaudited)
|
|
|
Net Revenues by
Category
|
|
Six Months
Ended
June
30,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs. 2023(1)
|
|
2024
|
|
2023
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Venues
|
$
879.4
|
|
$
839.9
|
|
$
39.5
|
|
4.7 %
|
|
4.6 %
|
|
Topgolf other business
lines
|
37.8
|
|
34.4
|
|
3.4
|
|
9.9 %
|
|
9.6 %
|
|
Golf Clubs
|
656.1
|
|
691.1
|
|
(35.0)
|
|
(5.1 %)
|
|
(3.4 %)
|
|
Golf Balls
|
207.6
|
|
203.6
|
|
4.0
|
|
2.0 %
|
|
2.5 %
|
|
Apparel
|
304.6
|
|
319.6
|
|
(15.0)
|
|
(4.7 %)
|
|
(3.2 %)
|
|
Gear, Accessories
& Other
|
216.5
|
|
258.5
|
|
(42.0)
|
|
(16.2 %)
|
|
(15.6 %)
|
|
Total net
revenues
|
$
2,302.0
|
|
$
2,347.1
|
|
$
(45.1)
|
|
(1.9 %)
|
|
(1.1 %)
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2023 exchange rates to 2024 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues by
Region
|
|
Six Months
Ended
June
30,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs. 2023(1)
|
|
2024
|
|
2023
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
1,720.3
|
|
$
1,697.8
|
|
$
22.5
|
|
1.3 %
|
|
1.3 %
|
|
Europe
|
255.5
|
|
273.8
|
|
(18.3)
|
|
(6.7 %)
|
|
(7.8 %)
|
|
Asia
|
236.7
|
|
288.4
|
|
(51.7)
|
|
(17.9 %)
|
|
(10.8 %)
|
|
Rest of
world
|
89.5
|
|
87.1
|
|
2.4
|
|
2.8 %
|
|
4.1 %
|
|
Total net
revenues
|
$
2,302.0
|
|
$
2,347.1
|
|
$
(45.1)
|
|
(1.9 %)
|
|
(1.1 %)
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2023 exchange rates to 2024 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
Six Months
Ended
June
30,
|
|
Growth/(Decline)
|
|
Constant
Currency
vs. 2023(1)
|
|
2024
|
|
2023
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
917.2
|
|
$
874.3
|
|
$
42.9
|
|
4.9 %
|
|
4.8 %
|
|
Golf
Equipment
|
863.7
|
|
894.7
|
|
(31.0)
|
|
(3.5 %)
|
|
(2.0 %)
|
|
Active
Lifestyle
|
521.1
|
|
578.1
|
|
(57.0)
|
|
(9.9 %)
|
|
(8.7 %)
|
|
Total net
revenues
|
$
2,302.0
|
|
$
2,347.1
|
|
$
(45.1)
|
|
(1.9 %)
|
|
(1.1 %)
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
$
59.0
|
|
$
46.8
|
|
$
12.2
|
|
26.1 %
|
|
|
|
Golf
Equipment
|
159.5
|
|
178.0
|
|
(18.5)
|
|
(10.4 %)
|
|
|
|
Active
Lifestyle
|
39.4
|
|
56.8
|
|
(17.4)
|
|
(30.6 %)
|
|
|
|
Total segment operating
income
|
257.9
|
|
281.6
|
|
(23.7)
|
|
(8.4 %)
|
|
|
|
Corporate costs and
expenses(2)
|
(88.0)
|
|
(85.1)
|
|
(2.9)
|
|
3.4 %
|
|
|
|
Total operating
income
|
169.9
|
|
196.5
|
|
(26.6)
|
|
(13.5 %)
|
|
|
|
Interest expense,
net
|
(115.8)
|
|
(101.3)
|
|
(14.5)
|
|
14.3 %
|
|
|
|
Other income
(expense), net
|
9.8
|
|
(2.8)
|
|
12.6
|
|
(450.0 %)
|
|
|
|
Total income before
income taxes
|
$
63.9
|
|
$
92.4
|
|
$
(28.5)
|
|
(30.8 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2023 exchange rates to 2024 reported sales
in regions outside the U.S.
|
|
(2) Amount
includes corporate general and administrative expenses not utilized
by management in determining segment profitability, in addition to
certain non-cash and non-recurring items described in the
Supplemental Financial Information and Non-GAAP Reconciliation
table below.
|
|
Three Months Ended
June 30,
|
|
2024
|
|
2023
|
|
GAAP
|
|
Non-Cash
Amortization
(1)
|
|
Non-
Recurring
Items(2)
|
|
Tax
Valuation
Allowance
|
|
Non-
GAAP
|
|
GAAP
|
|
Non-Cash
Amortization
(1)
|
|
Non-
Recurring
Items(3)
|
|
Tax
Valuation
Allowance(4)
|
|
Non-
GAAP
|
|
Income from
operations
|
$
103.0
|
|
$
(2.9)
|
|
$
(15.9)
|
|
$
—
|
|
$
121.8
|
|
$
116.0
|
|
$
(4.1)
|
|
$
(7.6)
|
|
$
—
|
|
$
127.7
|
|
Net income
|
$
62.1
|
|
$
(2.2)
|
|
$
(18.8)
|
|
$
—
|
|
$
83.1
|
|
$
117.4
|
|
$
(3.1)
|
|
$
(5.9)
|
|
$
50.8
|
|
$
75.6
|
|
Earnings per share -
diluted (5)
|
$
0.32
|
|
$
(0.01)
|
|
$
(0.09)
|
|
$
—
|
|
$
0.42
|
|
$
0.59
|
|
$
(0.01)
|
|
$
(0.03)
|
|
$
0.25
|
|
$
0.38
|
|
|
(1)
Includes the amortization of
acquired intangible assets, including customer and distributor
relationships, reacquired distribution rights and acquired
developed technology related to our merger with Topgolf,
acquisitions of Jack Wolfskin, TravisMathew and OGIO, and
reacquisition of distribution rights in the Korea apparel market
(collectively, the "Acquisitions"). While the amortization of
acquired intangible assets is excluded from our calculation of
non-GAAP net income, the revenue, operating costs and acquired
assets that contribute to the revenue generation for these acquired
companies is reflected in our calculation of non-GAAP net income.
Starting in the second quarter of 2024, the depreciation and
amortization associated with purchase accounting adjustments
stemming from these acquisitions is excluded from our non-GAAP
adjustments. As such, prior period amounts have been recast in
order to conform with the current period presentation. For the
three months ended June 30, 2024 and 2023, non-cash depreciation
and amortization related to these purchase accounting adjustments
was $1.4 million and $2.9 million,
respectively.
|
|
(2) Primarily includes
$11.7 million of restructuring and reorganization charges, $3.4
million in currency translation adjustments reclassified into
earnings due to the dissolution of the Jack Wolfskin Russia entity,
$3.4 million of charges related to the impairment and abandonment
of the Shankstars media game in the Topgolf segment, and $1.1
million in IT integration charges including costs associated with
the implementation of a new cloud based HRM system.
|
|
(3) Primarily includes
$3.1 million in restructuring and reorganization charges in our
Active Lifestyle operating segment and $2.2 million in IT
integration and implementation costs stemming from
acquisitions.
|
|
(4)
Release of tax valuation allowances recorded in connection with the
merger with Topgolf.
|
|
(5)
Diluted earnings per share calculated using the if-converted
method, which excludes periodic interest expense related to the
2020 convertible notes from the calculation of net income for the
purpose of calculating diluted earnings per share.
|
|
Six months ended
June 30,
|
|
2024
|
|
2023
|
|
GAAP
|
|
Non-Cash
Amortization
(1)
|
|
Non-
Recurring
Items(2)
|
|
Tax
Valuation
Allowance(3)
|
|
Non-
GAAP
|
|
GAAP
|
|
Non-Cash
Amortization
(1)
|
|
Non-
Recurring
Items(4)
|
|
Tax
Valuation
Allowance(3)
|
|
Non-
GAAP
|
|
Income from
operations
|
$
169.9
|
|
$
(5.8)
|
|
$
(18.7)
|
|
$
—
|
|
$
194.4
|
|
$
196.5
|
|
$
(8.4)
|
|
$
(10.8)
|
|
$
—
|
|
$
215.7
|
|
Net income
|
$
68.6
|
|
$
(4.4)
|
|
$
(24.5)
|
|
$
—
|
|
$
97.5
|
|
$
142.4
|
|
$
(6.4)
|
|
$
(16.3)
|
|
$
59.1
|
|
$
106.0
|
|
Earnings per share -
diluted (5)
|
$
0.36
|
|
$
(0.02)
|
|
$
(0.12)
|
|
$
—
|
|
$
0.51
|
|
$
0.72
|
|
$
(0.03)
|
|
$
(0.08)
|
|
$
0.29
|
|
$
0.54
|
|
|
(1) Includes
the amortization of acquired intangible assets, including customer
and distributor relationships, reacquired distribution rights and
acquired developed technology related to our merger with Topgolf,
acquisitions of Jack Wolfskin, TravisMathew and OGIO, and
reacquisition of distribution rights in the Korea apparel market
(collectively, the "Acquisitions"). While the amortization of
acquired intangible assets is excluded from our calculation of
non-GAAP net income, the revenue, operating costs and associated
acquired assets that contribute to the revenue generation
associated with these acquired companies is reflected in our
calculation of non-GAAP net income. Starting in the second quarter
of 2024, the depreciation and amortization associated with purchase
accounting adjustments stemming from these acquisitions is excluded
from our non-GAAP adjustments. As such, prior period amounts have
been recast in order to conform with the current period
presentation. For the six months ended June 30, 2024 and 2023,
non-cash depreciation and amortization related to these purchase
accounting adjustments was $3.2 million and $6.7 million,
respectively.
|
|
(2) Primarily includes
$11.8 million of restructuring and reorganization charges, $4.7
million in charges related to our 2024 debt repricing, $3.4 million
in currency translation adjustments reclassified into earnings due
to the dissolution of the Jack Wolfskin Russia entity, $3.4 million
of charges related to the impairment and abandonment of the
Shankstars media game in the Topgolf segment, $1.2 million in IT
costs related to a 2023 cybersecurity incident, and $1.8 million in
IT integration charges including costs associated with the
implementation of a new cloud based HRM system.
|
|
(3)
Related to the release of tax valuation allowances recorded in
connection with the merger with Topgolf.
|
|
(4)
Primarily includes $13.1 million in total charges related to our
2023 debt modification, $3.4 million in IT integration and
implementation related costs stemming from the acquisitions of Jack
Wolfskin, TravisMathew and Topgolf, and $3.1 million in
restructuring and reorganization charges in our Active Lifestyle
operating segment.
|
|
(5)
Diluted earnings per share calculated using the if-converted
method, which excludes periodic interest expense related to the
2020 convertible notes from the calculation of net income for the
purpose of calculating diluted earnings per share.
|
|
2024 Trailing Twelve Month Adjusted
EBITDA
|
|
2023 Trailing Twelve Month Adjusted
EBITDA
|
|
Quarter
Ended
|
|
Quarter
Ended
|
|
September
30,
|
|
December
31,
|
|
March
31,
|
|
June
30,
|
|
|
|
September
30,
|
|
December
31,
|
|
March
31,
|
|
June
30,
|
|
|
|
2023
|
|
2023
|
|
2024
|
|
2024
|
|
Total
|
|
2022
|
|
2022
|
|
2023
|
|
2023
|
|
Total
|
|
Net income
(loss)
|
$
29.7
|
|
$
(77.1)
|
|
$
6.5
|
|
$
62.1
|
|
$
21.2
|
|
$
38.5
|
|
$
(72.7)
|
|
$
25.0
|
|
$
117.4
|
|
$ 108.2
|
|
Interest expense,
net
|
52.3
|
|
56.6
|
|
58.8
|
|
57.0
|
|
224.7
|
|
36.4
|
|
42.5
|
|
49.6
|
|
51.7
|
|
180.2
|
|
Income tax (benefit)
provision
|
(3.0)
|
|
(7.2)
|
|
5.0
|
|
(9.7)
|
|
(14.9)
|
|
0.3
|
|
(3.5)
|
|
(4.2)
|
|
(45.8)
|
|
(53.2)
|
|
Non-cash depreciation
and amortization expense
|
61.0
|
|
64.0
|
|
65.4
|
|
65.8
|
|
256.2
|
|
48.4
|
|
53.0
|
|
56.1
|
|
58.6
|
|
216.1
|
|
Non-cash stock
compensation and stock warrant expense, net
|
13.2
|
|
8.4
|
|
14.2
|
|
7.0
|
|
42.8
|
|
10.3
|
|
9.7
|
|
12.5
|
|
12.3
|
|
44.8
|
|
Non-cash lease
amortization expense
|
4.5
|
|
4.4
|
|
3.5
|
|
3.6
|
|
16.0
|
|
4.4
|
|
4.5
|
|
4.6
|
|
4.4
|
|
17.9
|
|
Non-recurring items,
before taxes(1)
|
5.6
|
|
20.7
|
|
7.5
|
|
19.8
|
|
53.6
|
|
6.1
|
|
3.1
|
|
13.7
|
|
7.6
|
|
30.5
|
|
Adjusted
EBITDA
|
$
163.3
|
|
$
69.8
|
|
$
160.9
|
|
$
205.6
|
|
$ 599.6
|
|
$
144.4
|
|
$
36.6
|
|
$
157.3
|
|
$
206.2
|
|
$ 544.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In 2024,
amounts include restructuring and reorganization charges in our
Active Lifestyle segment, charges related to the 2024 debt
repricing, currency translation adjustments reclassified into
earnings due to the dissolution of the Jack Wolfskin Russia entity,
charges related to the impairment and abandonment of the Shankstars
media game, IT costs related to a 2023 cybersecurity incident, and
IT integration and implementation costs associated with the
implementation of a new cloud based HRM system. In 2023, amounts
include charges related to the impairment and abandonment of the
Shankstars media game, charges in connection with the 2023 debt
modification, IT integration and implementation costs stemming
primarily from the merger with Topgolf, restructuring and
reorganization charges in our Topgolf and Active Lifestyle
segments, and costs related to a cybersecurity incident. In 2022,
amounts include non-cash asset write-downs associated with the Jack
Wolfskin retail operations in Russia and the closure of a
pre-merger Topgolf concept location, both due to business decisions
to exit those businesses, costs associated with the implementation
of new IT systems for Topgolf, and legal costs and credit agency
fees related to a postponed debt refinancing.
|
|
Reconciliation of
Consolidated Non-GAAP Adjusted Free Cash Flow
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
GAAP cash flows
provided by (used in) operations (1)
|
$
151.4
|
|
$
(21.8)
|
|
Less: capital
expenditures (1)
|
(149.3)
|
|
(262.6)
|
|
Add: proceeds from
lease financing(1)
|
54.6
|
|
111.3
|
|
Consolidated
Non-GAAP Adjusted Free Cash Flow
|
$
56.7
|
|
$
(173.1)
|
|
|
(1) Source:
Condensed consolidated statement of cash flows within the Company's
quarterly report on Form 10-Q.
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Topgolf Adjusted Segment EBITDA
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Topgolf Segment
operating income(1):
|
$
56.1
|
|
$
44.0
|
|
$
59.0
|
|
$
46.8
|
|
Non-GAAP depreciation
and amortization expense
|
49.1
|
|
39.6
|
|
97.6
|
|
76.3
|
|
Non-Cash stock
compensation expense
|
1.2
|
|
4.2
|
|
6.4
|
|
8.3
|
|
Non-cash lease
amortization expense
|
3.1
|
|
4.3
|
|
6.3
|
|
8.8
|
|
Topgolf Adjusted
Segment EBITDA
|
$
109.5
|
|
$
92.1
|
|
$
169.3
|
|
$
140.2
|
|
|
(1) We do
not calculate GAAP net income at the operating segment level, but
have provided Topgolf's segment income from operations as a
relevant measurement of profitability. Segment income from
operations does not include interest expense and taxes as well as
other non-cash and non-recurring items. Segment operating income is
reconciled to the Company's consolidated pre-tax income in the
Segment Results section of this release.
|
|
Reconciliation of
Topgolf Adjusted Segment EBITDA
|
Twelve
Months Ended
December 31,
|
|
2023
|
|
|
|
Topgolf Segment
operating income(1):
|
$
108.8
|
|
Non-GAAP depreciation
and amortization expense
|
164.9
|
|
Non-cash stock
compensation expense
|
12.9
|
|
Non-cash lease
amortization expense
|
17.1
|
|
Other expense,
net
|
0.6
|
|
Topgolf Adjusted
Segment EBITDA
|
$
304.3
|
|
|
(1) We do
not calculate GAAP net income at the operating segment level, but
have provided Topgolf's segment income from operations as a
relevant measurement of profitability. Segment income from
operations does not include interest expense and taxes as well as
other non-cash and non-recurring items. Segment operating income is
reconciled to the Company's consolidated pre-tax income in the
Segment Results section of this release.
|
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SOURCE Topgolf Callaway Brands Corp.